The finishing department of Diana Company produced 40,000 units of standard chairs during the month of February. It incurred $15,000 in direct materials cost; 2,500 direct labor hours paid at $10 per hour; and manufacturing overhead applied at 150% of direct labor cost. Diana Company uses process costing to accumulate costs. Assume there is no beginning inventory. Required a) Calculate the conversion costs incurred during the month of February. b) Assume, that only 30,000 units were completed and transferred out. The remaining 10,000 units left in ending inventory are only 70% complete with respect to conversion costs. Direct materials are added at the beginning of the process. Prepare a cost of production report. Diana Company Cost of Production Report - Inputs Beginning Add Equals Cutting Current Total Inventory Month Production -Outputs Add Ending Completed WIP Transfer Out Inventory Total Outputs Unit Calculations Direct Materials Whole Units % Equivalent Completed Conversion Equivalent Units Inputs Beginning Add Cutting Current Inventory Month Equals Total Cost of Production -Outputs Cost of | Subtract = Ending Production Completed WIP Per Unit Transfer Out Inventory Check Total Outputs Total Inputs Cost Calculations Direct Materials Units Direct Materials Costs Conversion Units Direct Labor Manufacturing Overhead Total Conversion Cost Total 66 Process Costing Chapter 3 c) Refer to the cost of production report in part b. What are the cost per equivalent unit with respect to direct materials and conversion costs, the total costs transferred out to finished goods inventory, and the value of inventory at the end of February? d) Refer to the cost of production report in part b. Provide the journal entry to record direct materials, direct labor and manufacturing overhead. Also provide the journal entry to record the transfer of goods out of WIP and into finished goods inventory. Date Account Title and Explanation Debit Credit a) Calculate the conversion costs incurred during the month of February. b) Prepare a cost of production report. Diana Company Cost of Production Report For the month ended February 29, 2020 ........Inputs.......... Beginning Add Cutting Current Inventory Month Equals Total Production .........Outputs.... Add Ending Completed WIP Transfer Out Inventory Total Outputs Unit Calculations: Direct Materials Whole Units % Equivalent Completed Conversion Equivalent Units .........Inputs......... Beginning Add Cutting Current Inventory Month Equals Total Cost of Production Cost of Production Per Unit .........Outputs......... Subtract - Ending Completed WIP Transfer Out Inventory Check Total Outputs = Total Inputs Cost Calculations: Direct Materials Units Direct Materials Costs Conversion Units: Direct Labor Manufacturing Overhead Total Conversion Cost Total c) Refer to the cost of production report in part b. What are the cost per equivalent unit with respect to direct materials and conversion costs, the total costs transferred out to finished goods inventory, and the value of inventory at the end of February? Cost per equivalent unit - direct materials Cost per equivalent unit - conversion costs Total costs transferred out to finished goods Total inventory at the end of February d) Refer to the cost of production report in part b. Provide the journal entry to record direct materials, direct labor and manufacturing overhead. Also provide the journal entry to record the transfer of goods out of WIP and into finished goods inventory. Hint: use 2/29/2020 for these end of month journal entries. Date Account Title and Explanation Debit Credit The finishing department of Diana Company produced 40,000 units of standard chairs during the month of February. It incurred $15,000 in direct materials cost; 2,500 direct labor hours paid at $10 per hour; and manufacturing overhead applied at 150% of direct labor cost. Diana Company uses process costing to accumulate costs. Assume there is no beginning inventory. Required a) Calculate the conversion costs incurred during the month of February. b) Assume, that only 30,000 units were completed and transferred out. The remaining 10,000 units left in ending inventory are only 70% complete with respect to conversion costs. Direct materials are added at the beginning of the process. Prepare a cost of production report. Diana Company Cost of Production Report - Inputs Beginning Add Equals Cutting Current Total Inventory Month Production -Outputs Add Ending Completed WIP Transfer Out Inventory Total Outputs Unit Calculations Direct Materials Whole Units % Equivalent Completed Conversion Equivalent Units Inputs Beginning Add Cutting Current Inventory Month Equals Total Cost of Production -Outputs Cost of | Subtract = Ending Production Completed WIP Per Unit Transfer Out Inventory Check Total Outputs Total Inputs Cost Calculations Direct Materials Units Direct Materials Costs Conversion Units Direct Labor Manufacturing Overhead Total Conversion Cost Total 66 Process Costing Chapter 3 c) Refer to the cost of production report in part b. What are the cost per equivalent unit with respect to direct materials and conversion costs, the total costs transferred out to finished goods inventory, and the value of inventory at the end of February? d) Refer to the cost of production report in part b. Provide the journal entry to record direct materials, direct labor and manufacturing overhead. Also provide the journal entry to record the transfer of goods out of WIP and into finished goods inventory. Date Account Title and Explanation Debit Credit a) Calculate the conversion costs incurred during the month of February. b) Prepare a cost of production report. Diana Company Cost of Production Report For the month ended February 29, 2020 ........Inputs.......... Beginning Add Cutting Current Inventory Month Equals Total Production .........Outputs.... Add Ending Completed WIP Transfer Out Inventory Total Outputs Unit Calculations: Direct Materials Whole Units % Equivalent Completed Conversion Equivalent Units .........Inputs......... Beginning Add Cutting Current Inventory Month Equals Total Cost of Production Cost of Production Per Unit .........Outputs......... Subtract - Ending Completed WIP Transfer Out Inventory Check Total Outputs = Total Inputs Cost Calculations: Direct Materials Units Direct Materials Costs Conversion Units: Direct Labor Manufacturing Overhead Total Conversion Cost Total c) Refer to the cost of production report in part b. What are the cost per equivalent unit with respect to direct materials and conversion costs, the total costs transferred out to finished goods inventory, and the value of inventory at the end of February? Cost per equivalent unit - direct materials Cost per equivalent unit - conversion costs Total costs transferred out to finished goods Total inventory at the end of February d) Refer to the cost of production report in part b. Provide the journal entry to record direct materials, direct labor and manufacturing overhead. Also provide the journal entry to record the transfer of goods out of WIP and into finished goods inventory. Hint: use 2/29/2020 for these end of month journal entries. Date Account Title and Explanation Debit Credit